Unmoving—EU oil jolt may not be enough to rock Assad

Oil sanctions which the European Union is expected to impose on Damascus for repressing protests would be a significant blow to Syria's economy but it may take more than that to hasten the end of President Bashar al-Assad's rule.

“Thirty percent of the labour force is in the public sector and this means the economy will feel the effect because these people also consume, pay rent, buy food and clothes,” he said.

That kind of disruption would be likely to fuel more dissent against Assad, and Achy said the financial cost of unrest could ultimately bring down his rule.

But Ayham of Eurasia Group said it was unlikely the immediate impact would be so severe, and that only a broader EU trade embargo would really squeeze Syria.

“(EU oil sanctions) are not going to be a significant impediment in terms of financial constraints on the regime in terms of hard currency,” he said.

One lifeline for Syria is that it entered this current crisis with foreign reserves thought to be between $16 billion and $18 billion along with a low debt burden of around a quarter of GDP, half of which was external debt.

That is likely to rise as the combination of falling revenues and higher expenditure — including fuel subsidies and public sector salary rises aimed at containing dissent — are set against a shrinking economy, pushing the likely budget deficit above 8 percent of GDP this year, Achy said. (Additional reporting by Suleiman al-Khalidi in Amman; Editing by Ruth Pitchford)